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Tuesday, 17 March 2020

EGX sell-off continues as shares fall 7%

The selloff on the EGX continued yesterday, tripping circuit breakers yet again: The sell-off on the EGX continued at pace yesterday, with the benchmark EGX30 index finishing 7.1% in the red and the wider EGX100 falling more than 6%. CIB, the EGX30 heavyweight, closed down 6.7%. Qalaa Holdings and El Motaheda For Housing & Reconstruction each saw their stock prices fall by 10%, while EFG Hermes’ shares dropped by 9.99%, market data showed.

Circuit breakers were triggered for the second time this week and third time this month, suspending trading for 30 minutes after the index fell 6.16% in the first half hour of trading.

Several individual companies also saw trading on their stocks suspended after reaching the permissible 5% loss limit, including CI Capital, QNB ALAHLI, Telecom Egypt, GB Auto, and Rameda, among others.

This came just a day after the index delivered its worst showing since November 2012, with shares tumbling 9.3%.

The sea of red continued across regional indices yesterday, with only Qatar’s stock exchange seeing gains. Israel’s bourse was the worst hit, closing down 8%, while the Abu Dhabi Exchange dropped 7.83%, and Dubai’s main index fell 6.15%. Saudi’s Tadawul fell 5.21%.

With shares trading at valuations unseen since the float of the EGP, companies are turning to buybacks: Madinet Nasr Housing and Development, Egypt Kuwait Holding, Palm Hills, and GB Auto have all announced share buybacks during yesterday’s session (here, here, here, and here — pdfs). Raya Holdings’ board of directors also approved buying back 10% of Raya Contact Center’s treasury shares to support its stock price, according to a regulatory filing (pdf). Many listed companies said earlier this month they’re lining up to buy back treasury shares to take advantage of temporary rules by the Financial Regulatory Authority to allow them to notify the EGX and complete buybacks on the same day to hedge against the volatility.

The EGX is now the second-worst performing index in the region: The EGX30 is now down 32.5% YTD, a decline matched only by the Dubai Financial Market, which is currently 33.36% in the red since 1 January.

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